- Coiled Spring Capital Macro Report
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- Coiled Spring Capital MR 7/6/24
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Table of Contents
Introduction
"Big Beautiful Bills," “tacos,” and now a new political party—courtesy of Elon Musk, once the richest man on Earth and a former presidential confidant. Who could have scripted better political theatre? It’s part satire, part spectacle—and we’d gladly watch the movie, if we weren’t a little worried about how it all ends.
But in a world clouded by nonstop uncertainty, one truth cuts through the noise: Price.
You can debate the market’s rationale all you want—valuation models, policy risks, geopolitical tensions—but the market isn’t listening. It doesn’t care about your logic or your discomfort. What it does care about is movement, momentum, and money flow. And right now, it just completed one of the fastest V-shaped recoveries in recent history.
What makes the recent run even more remarkable is that it’s happened without any help from the Fed—despite growing pressure from an irate Trump frustrated with their resistance to cutting rates.
What’s likely to really unnerve the bears is that advances like this aren’t the beginning of the end—they’re usually the start of something bigger. Historically, similar setups have led to a 100% positivity rate over the following 12 months.
According to the latest CFTC data, asset manager positioning in E-mini S&P futures is at its lowest level in a year—even as the SPX surges to new all-time highs. That’s not the kind of positioning you typically see at major market tops.
Even last week’s payroll report points to an economy that continues to defy the skeptics—many of whom, including us, expected Trump’s tariff regime to spark a wave of layoffs. That hasn’t happened.
U.S. job growth exceeded expectations in June, but beneath the surface, there are signs of softening—jobless claims have been ticking higher, and wage growth continues to cool.
Still, the unemployment rate edged up to 4.1%, easing pressure on the Fed to act quickly. As a result, the probability of a July rate cut has diminished, with markets now assigning a ~70% chance to the September FOMC meeting. Expectations for three cuts by year-end have largely been priced out.
Over the weekend, the Trump administration officially delayed the tariff deadline to August 1st, removing one of the more immediate macro headwinds facing markets this week. This extension opens the door for continued market expansion—especially if, as Bessent hinted, several large trade agreements are nearing the finish line.
In our 6/29 report, we highlighted that momentum was building for higher index prices. While a growing chorus of bears warned that a top was forming, the SPX responded with a swift 100-handle surge in just 3.5 trading days, marking yet another all-time high.
As we wrote in that report:
“While bears argue this is the last gasp of strength before a reversal, we see that as more hope than thesis. Momentum is building, not fading.”
The title of that piece, Don’t Fight Inertia, was no accident.
We also said:
“A market in motion tends to stay in motion. A breakout to new ATHs, after four months of consolidation, argues strongly for more highs to come.”
That still stands. However, as we always remind readers, markets don’t move in straight lines. A few new technical developments have emerged that could introduce near-term turbulence or at least pause the advance.
Let’s dive into the charts.
